Date: 6.14.1999
"YOU WON'T BELIEVE who just sat down next to us," gasps Howard Stringer, chief executive of Sony Corp. of America, a $19 billion piece of the Japanese multinational. Stringer, 57, edges forward in his seat, his eyes ablaze with an unusual intensity. We are having lunch in New York's Four Seasons when Stringer's discarded predecessor, Michael Schulhof, slides quietly into a seat.
For pure coincidence, it doesn't get better than this. Schulhof was eased out of his job in December 1995 after Sony took a hugely embarrassing writeoff of $2.7 billion. Brilliant engineer that he was, Schulhof was a flop at making convergence pay off for his Japanese masters. Convergence is the issue of the moment in Sony's world-digital and analog, computer and television, work and play are all still at an early stage.
The agreeable Stringer seems to know and greet the whole restaurant. Yet, when it comes to Schulhof, it's silence. The two do not acknowledge each other except for body language. Schulhof stiffens and pivots away from us. Stringer lowers his head, whispering wondrously, "What are the chances of that? Now we'll have to talk in initials. . . . But, you know, Schulhof and I always got along fine."
That's Stringer, the builder of bridges, master of politics, and so oozing with his brand of boyish, self-deprecating charm he's impossible not to like. These skills have helped him dodge bullets along the way-perhaps literally in Vietnam. "Yes, I suppose there is a parallel between Vietnam and Sony," Stringer says reflectively. As we break into the bread, he tells the story: Just four months after arriving in this country from England in 1965, he was drafted and shipped to Vietnam.
Stringer says: "You can either make it an experience that you get something out of, or go off in a corner and sulk. I made friends and became the barracks' lawyer, letter-writer and confidant. I helped the commanding officer get a college degree."
In turn, Stringer, who was a military policeman, became a personnel sergeant, a considerably safer job. His skill? "It is adapting. If you come from a small town in Wales to attend an English boarding school, you get good at adapting."
Working as a writer-producer at CBS in the late Sixties, Stringer adapted his way up to the presidency of the CBS Broadcast Group. Later, with encouragement from talent agent Michael Ovitz, Stringer was able in 1995 to parlay his experience into a job running a convergence venture, backed by three telephone companies. Called Tele-TV, it was supposed to connect the telephone companies with interactive TV. Perhaps just ahead of its time, it went dead in 1997. This bullet found its mark.
Then Stringer was rescued by Sony. When Stringer joined in May 1997 as president of Sony America, he had a fraction of the job Schulhof had held. Not about to hand over the keys to another American, Sony's cerebral president Nobuyuki Idei commuted to New York monthly. Stringer was given the theater chain, a fledgling on-line business and a few other small units. "Nothing reported to me," says Stringer, exaggerating only slightly. Consumer electronics, music and film reported to Idei.
"I had friends say, 'Go in and demand things.' It's not my style. I knew I wasn't going to run the company. I wouldn't want to and I wouldn't be good at it. So, I spent a lot of time building bridges, internally and externally. If [Sony Music chief Thomas] Mottola and [Sony Pictures head John] Calley shut me out, the job would have been hard to do. No fun."
Responsibilities trickled in. After three months, Stringer was made chairman of Sony of Canada Ltd. By January 1998, he was named chairman of Sony Electronics; in December, chairman of Sony Pictures and Sony Music, with Calley and Mottola reporting to him.
Our appetizers arrive as I fiddle with my $250 Sony tape recorder purchased for the occasion. I ask: "Is Sony a hardware company in today's software world?"
No quick response. While Sony has had a 25% run in its stock price-at one point up to $100-since March, its market valuation at 0.6 times sales could never be mistaken for that of a software company. Sales for the Mar. 31 fiscal year were flat at $57 billion, all but $13.6 billion of those sales from hardware; net income was off 19% to $1.5 billion. The Asian flu and a rising yen infected the profit line. It has been no picnic at Stringer's part of the business, either. Sluggish sales at Sony Electronics are attributed to price wars in the U.S. and weak demand abroad. The year-to-year comparisons in the motion picture business are down.
How will Sony link up its technology with its entertainment? "In the analog age, hardware and software companies had little in common. They could be independent," says Stringer, looking seriously into his soup.
While Sony has long relied on the elegance of its hardware, it seems that clever software, above all else, will determine if a product, whether a television or telephone, will succeed. "In a digital age, we have to be everywhere because content can be distributed over myriad distribution forms," he says. "Sony makes the best electronic products, but they get copied. We must have other revenue streams."
Sony is pinning large hopes on its PlayStation II. This powerful new version of its videogame player, due out in 2000, will offer Internet access. Stringer doesn't hold back the superlatives, calling it the Sony "Trojan horse," a "modern miracle" and a "new form of entertainment."
But in the battle for control of the living room, will victory go to entertainment devices communicating with each other seamlessly (Sony's side)? Or will the world converge on the PC (Microsoft-Intel)?
Stringer-san takes the diplomatic route: "I don't think it has to be a war. Idei and Bill Gates have a compelling relationship, both respecting the advantages of one another. If you talk to the engineers of both companies, their instinct is to go it alone." However, perhaps it's a Tokyo-Seattle dtente because the two giants joined forces in providing Sony's new on-line music downloading service.
He goes on: "Five years ago everyone wanted the dominant partnership. Now minority shares are the norm. You have alliances with everybody and you are forced into a relationship with people you wouldn't speak to ten years ago."
Downside? "It's debilitating. You can't afford to be rude to anyone." Perhaps, but still no need to say hello to our neighbor Schulhof, who slips away as quietly as he came, after perhaps one of the shortest lunches ever served by the Four Seasons.
So where's the big Sony joint venture? "We haven't found the sparkling opportunity that blends technology and content in a liberating form," he says. Waiting can also make him look smart, he notes. "One thing about the Internet, and emerging software, is that if you wait long enough yesterday's plans will be redundant. . . . We almost did a deal with partial cash, but I didn't want to be ridiculed by you as the first to ever pay cash for an Internet company," he laughs.
Another group of diners comes by to greet Stringer. "Since PlayStation's success, everyone wants to talk to us," Stringer enthuses. No kidding. Over waddles Art Buchwald, the humorist. With feigned sternness, he orders me to write down: "Howard Stringer is a great executive."
How about a deal with a network? "Up until now we haven't been hurt by a lack of distribution. As networks own more content, they exact a price. But you don't want to spend $15 billion solving a $40 million problem."
Boiling it down for us, Stringer says, "Sony is a trusted brand, so we can bypass traditional distribution channels and go straight to the consumer."
Reflectively, Stringer sighs: "It's funny being a part of a brave new world when your background is old-fashioned. I started as a writer, you know."
He explains that that is why he could take the gamble with the job for Sony. "I had the security of my writing to fall back on, and ambivalence about being an executive. To this day, when people start talking about interest rates and debt restructuring, I get a headache. The nuts and bolts of dealmaking don't give me a high the way completing a script did. I'm not in Barry Diller's league or Rupert Murdoch's, God knows. But I do have a perspective that's different from everybody else's. I don't have to defend myself as a creative person because I am [one]."
He smiles and waves at Barbara Walters. "We have to go see her," he says. But first, one more question. "Who exactly is in charge here?" Idei obviously has increasing faith in Stringer and knows Stringer won't embarrass him. Idei makes fewer trips to New York.
Stringer hesitates to answer, takes a breath and says: "Idei is the mastermind. He is indispensable. I am dispensable." Are you really the chief executive of Sony America, as your title states, or a facilitator? He pleases his boss, Japanese style: "I am the facilitator."
Another bullet dodged.
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